INFLUENCE OF INVESTORS’ MONITORING ON EQUITY MUTUAL FUNDS’ PERFORMANCE

Authors

  • Renato Lazo Paz Universidade Federal de Minas Gerais
  • Robert Aldo Iquiapaza Universidade Federal de Minas Gerais (UFMG) Professor Adjunto CEPEAD/FACE/UFMG
  • Aureliano Angel Bressan Universidade Federal de Minas Gerais (UFMG) Professor Asociado CEPEAD/FACE/UFMG

DOI:

https://doi.org/10.18028/rgfc.v7i2.2844

Keywords:

Equity investment funds, Monitoring, Performance, Retail investor, Institutional investor.

Abstract

This paper analyzes the effect of investor monitoring on the performance of equity investment funds. For that purpose, we analyze the relationship between fund performance, measured using four-factor Alpha, and a set of control variables and monitoring proxy variables. We used monthly data for 1.317 funds, from January 2005 to April 2015. We organized the sample data into two subsamples, retail and institutional funds, to compare the performance of those funds whose clienteles presents, in principle, different monitoring capacities. Institutional funds presented superior performance compared to retail funds measured by net annual return as well as by four-factor Alpha. The variables investment, measured as the minimum initial investment requirement, and type of manager were statistically significant in the retail funds sample. The results show that greater capacity to monitor fund manager behavior could diminish the occurrence of activities against investor’s interests, which is one of the main contributions of this research.

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Author Biographies

Renato Lazo Paz, Universidade Federal de Minas Gerais

Mestre em Administração - Finanças pela Universidade Federal de Minas Gerais (UFMG)

Robert Aldo Iquiapaza, Universidade Federal de Minas Gerais (UFMG) Professor Adjunto CEPEAD/FACE/UFMG

Doutor em Administração - Finanças pela Universidade Federal de Minas Gerais (UFMG)

Aureliano Angel Bressan, Universidade Federal de Minas Gerais (UFMG) Professor Asociado CEPEAD/FACE/UFMG

Doutor em Economia Aplicada pela Universidade Federal de Viçosa

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Published

2017-03-14

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